The number of children living in poverty in working households in the UK has risen to its largest ever number, a report has found.

There are now 2.1 million impoverished youngsters living in homes where their parents or carers have jobs, according to a study by the Joseph Rowntree Foundation.

The Monitoring Poverty and Social Exclusion report found that the overall number of children living in poverty fell to 3.7 million.

The Foundation said the number of poverty-stricken children who live in workless households fell to 1.6 million - the lowest figure since 1984. However, the figures show that those who come from working households accounts for 58% of the total number of youngsters living in poverty.

Co-author of the report, Tom MacInnes, said: "The fall in child poverty among those in out-of-work households came about despite an estimated rise of 60,000 in the number of children living in workless households over the year. So, we can almost certainly say that it is related to the rise in both Child Benefit and Child Tax Credit in 2008. Without the substantial increases in these benefits, the numbers of children in poverty would be around half a million higher.

"With more than half of all children in poverty belonging to working families, it is simply not possible to base anti-poverty policies on the idea that work alone is a route out of poverty. Child poverty in working households must be given the same focus as out-of-work poverty. Until this happens, debates about poverty will continue to be misleading".

The report also found that between 2008 and 2009, 13 million people in the UK were living in poverty. It also discovered that by mid-2010, the unemployment rate among those aged 16-24 was at 20% - the highest in 18 years and three times that for other adults.

Co-author Anushree Parekh said: "The high level of young adult unemployment has been a striking feature of this recession. One in five adults aged under 25 who are looking for work cannot find it. But young adult unemployment has been rising since 2004 - this is a long term, chronic problem."

Joseph Rowntree Foundation chief executive Julia Unwin added: "Although it is important to recognise the reduction in child and pensioner poverty over the last decade, the government now faces many challenges, not solely related to work and poverty.

"The large numbers of young adults with few or no qualifications, persistent health inequalities and the lack of access for poor families to essential services, all make reducing social exclusion much more difficult. Welfare reform alone is nowhere near enough."